Cleaning up an out-of-whack portfolio
This couple want to streamline their investments in a turbulent market.
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| Jeremie, 34, and Christina, 33, Maehr with their children Katherine, 4, Alexandria, 2, and Nicholas, 6 months. Pleasanton, Calif. |
(Money Magazine) -- Jeremie Maehr doesn't like to let a good thing slip away. In 2000, when his girlfriend, Christina, was packing to move from Cleveland for a new job in California, he proposed - and moved with her. They have now been married for seven years and have three kids.
Today Jeremie and Christina fear their nest egg is what's slipping away. So far the bear market has erased about 40% of their investments, which include more than 25 mutual funds across five retirement plans and two brokerage accounts.
"We're still managing to save and invest for retirement," says Christina, "but our portfolio is down, out of whack, and in too many places."
Though the Maehrs hope to simplify their approach, they still want to take advantage of opportunities in the beaten-down market. But in unforgiving times, they want to pick funds wisely.
Plus, Christina, a former PR exec, plans to stay home with the kids for a few more years. So with one income instead of two temporarily, she says, "we feel like we need to have a bit more of a safety net."
1. Fix their mix. Less than half of the 11% that the Maehrs don't invest in stocks is in bonds.
Cathy Curtis, a certified financial planner with Curtis Financial Planning in Oakland, says they should raise that bond stake to 15% for safety, and boost foreign-equity exposure for growth.
2. Simplify. Reduce their holdings to 10 funds and roll over old 401(k)s from prior jobs into a Roth IRA to make their portfolio easier to manage.
3. Invest in index funds. Sell actively managed funds in their taxable account, harvest tax losses, and move to low-cost exchange-traded funds.
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